BOOK PROFIT IN SHORTS AS 8640 APPROACHES

US indices surged between 1%-1.2% yesterday, turning green for the 2015.

Nymex oil rose $2.03 to $50.48 a barrel as falling output and rising violence in Libya, along with central bank easing in China, helped the commodity rebound from one of its sharpest daily routs ever in the previous session. Brent also gained 4% to $56 a barrel.

Weekly jobless claims came in at 278,000, below estimates of 290,000 and above last week’s 267,000 figure. Non-farm productivity, which measures hourly output per worker, fell a greater-than-expected 1.8% for the fourth quarter. US trade deficit jumped 17.1% to $46.6 billion in December, the largest since November 2012. The number of planned layoffs by U.S. employers rose to a nearly two-year high in January as the energy industry slashed jobs in the face of falling oil prices.

Europe was mixed with FTSE and CAC ending marginally higher while DAX, Italy and Spain closing lower. Greece ended over 3% lower and banking stocks there plunged upto 23% after the ECB Wednesday took a hard line on Greek debt, revoking a waiver that allowed banks to use Greek government debt as collateral for loans.

AT HOME

After rising more than a percent, benchmark indices lost more than they had gained in the steep last hour fall to end modestly lower, extending the losing streak to fifth day. Sensex settled at 28851, down 32 points while Nifty lost 12 points to finish at 8712. BSE mid-cap and small-cap indices lost 1.3% each. BSE Power and Realty indices tumbled 2.8% each, becoming top losers among the sectoral indices while IT and Teck indices were the top gainers, putting on 2.1% and 1.3% respectively.

Tata Motors reported a 25% fall in quarterly profit at Rs 3581 cr and missed street expectations due to losses in its domestic business, unfavorable foreign exchange rates and a dip in sales at its Jaguar Land Rover unit. Sales rose 8.6% to Rs 69942 cr.

Just to reiterate, we have been working with the downside target of 8640, which is the 38.2% retracement level of the 8065-8997 upmove, ever since Nifty broke immediate support of 8850 last Friday. The benchmark has traded with a negative bias since then and touched a low of 8684 yesterday before closing at 8712, moving closer to the 8640 target.

Today, a lower opening would take Nifty closer to the 8640 mark, where profits in short positions can be booked. Long position however should be taken only after the benchmark sustains above immediate resistance on the hourly chart placed around 8810.

Tata Steel and NMDC will report their quarterly earnings today.

Key data to watch would be the US non-farm payroll report which is expected to show creation of 234,000 jobs in January, versus 252,000 jobs in December.